UT sports empire thrives thanks to global marketing giant

Global marketing firm ensures sports empire prospers

By Bruce Selcraig, San Antonio Express-News

September 12, 2015

Photo: Edward A. Ornelas, Staff

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The University of Texas Longhorns mascot Hook 'Em and cheerleaders perform Thursday before ﻿a concert ﻿at the UFCU Disch-Falk Field﻿. The Longhorns ranked No. 1 in collegiate merchandise sales for nine consecutive years. less

The University of Texas Longhorns mascot Hook 'Em and cheerleaders perform Thursday before ﻿a concert ﻿at the UFCU Disch-Falk Field﻿. The Longhorns ranked No. 1 in collegiate merchandise sales for nine ... more

Photo: Edward A. Ornelas, Staff

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Steve Patterson, University of Texas athletics director﻿, ﻿says universities have to "think like the pros" to generate the revenue that helps pay for facilities, training, health care and nutrition.

Steve Patterson, University of Texas athletics director﻿, ﻿says universities have to "think like the pros" to generate the revenue that helps pay for facilities, training, health care and nutrition.

Photo: Bob Owen, Staff

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The University of Texas Longhorns mascot Hook 'Em and cheerleaders perform Thursday before ﻿a concert ﻿at the UFCU Disch-Falk Field﻿. The Longhorns ranked No. 1 in collegiate merchandise sales for nine consecutive years. less

The University of Texas Longhorns mascot Hook 'Em and cheerleaders perform Thursday before ﻿a concert ﻿at the UFCU Disch-Falk Field﻿. The Longhorns ranked No. 1 in collegiate merchandise sales for nine ... more

Photo: Bob Owen, Staff

UT sports empire thrives thanks to global marketing giant

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The Texas Longhorns may be struggling on the football field, but when it comes to making money, UT's athletics program is the undisputed national champion, boasting an array of corporate sponsorships and a $160 million-plus budget that's the envy of the big-time college sports universe.

The Longhorns ranked No. 1 in collegiate merchandise sales for nine consecutive years and have recently completed a building bonanza that allocated $4.1 million for renovated athletics offices, $4.5 million for an expanded stadium club, $7.8 million for a nutrition center serving its 500 athletes and $6.2 million for a women's volleyball residence and practice facility that feels like a Scandinavian hotel.

Driving this exponential growth at Texas and dozens of other campuses - built on everything from T-shirt sales to concerts and complex multimedia rights deals - is a global sports marketing and talent firm, IMG Worldwide. Born from a handshake deal in 1960 between its founder, Mark McCormack, and golf icon Arnold Palmer, IMG has offices in 30 countries and represents more than a thousand clients, from Tiger Woods and model Kate Moss to the Bolshoi Ballet and about 200 major college athletics programs, including football juggernauts Ohio State, Alabama, Oregon and, since 1983, Texas.

"What we sell is the intellectual property," explained IMG spokesman Andrew Giangola. "The (Texas) mascot is extremely valuable. It's a beloved national brand, and a storied athletic program. People love those 'Horns."

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IMG's influence is so pervasive at Texas that on six Saturdays this fall, Longhorns fans can scarcely escape sponsorships negotiated for UT by the IMG College division. The Chevy Silverado is the Official Truck of Bevo, the Longhorns' live steer mascot. Thirty IMG affiliate radio stations across Texas carry the game day broadcasts of Craig Way, the "Voice of the Longhorns," including 97.5 FM in Houston.

Pressure to win

Fans can get cash from the ATM at Austin's University Federal Credit Union, an IMG client that put up $13.1 million to get its name on UT's renovated UFCU Disch-Falk baseball field. They sit in Longhorn logo'd seatbacks, owned by IMG College Seating, which has seen UT sales increase 74 percent over 2014. Austin's St. David's Medical Center, a loyal IMG partner, runs a clinic at the stadium. UT even has its own official yogurt, IMG-licensed Chobani.

Altogether, with some 21 corporate sponsorships alone, including giants AT&T, Coca-Cola and UPS, IMG helped generate nearly $32 million for the athletics department in 2014 in royalties, advertising and sponsorships, according to UT's 2015 annual report. Ticket sales brought in the lion's share for all sports, at $53.6 million, followed by contributions ($37.6 million) and NCAA/Big 12 conference money ($23.9 million), as part of a $161 million budget that is the envy of the nation's elite collegiate programs.

The Texas revenue machine puts pressure on coaches to win, and win big, something new football coach Charlie Strong knows full well. Mack Brown, who was paid $5.4 million a year, left with a $2.75 million buyout after three sub-par years with records of 8-5, 9-4 and 8-5, well short of contending for a national championship, which is what Texas fans expect and Brown achieved during the 2005 season. After Notre Dame defeated Texas 38-3 in this season's opener, Strong demoted two assistant coaches.

Some alumni and faculty believe Texas Athletics Director Steve Patterson has over-commercialized the Longhorn brand in a quest for athletic supremacy, all of the IMG-driven sponsorships, the blaring electronic stadium signage, the Rudy's BBQ mini-blimp dropping coupons on disgruntled UT basketball fans. But Patterson is unapologetic.

"I love what I'm doing. I don't think we should be ashamed," Patterson said as he gave a recent tour of Royal-Memorial Stadium's impressive new tutoring, nutrition and sports medicine centers, Olympic sport weight rooms and women's volleyball Shangri-La. "Sometimes you have to think like the pros, and that shocks some people when I say that."

Athletics vs. academics

Elevator doors opened on a covey of busy hardhats finishing a new cafeteria for athletes, as Patterson, a former NBA executive with the Houston Rockets and Portland Trailblazers, smiled upon the Longhorn fortune. "Everyone knows about Mack Brown's salary," said Patterson, whose own $1 million paycheck is 10 times that of a UT music professor, "but they don't see what we're doing for women's sports, for injured athletes and educating athletes...

"What we've been looking at are two sides of the same coin," said Patterson, who was named UT's athletics director in November 2013. "We can't provide any of these services - the mentoring for athletes, the facilities for coaches, the amenities for our fans - if we don't generate the revenue. That's a cultural shift for a lot of public institutions, particularly among educators, but at the end of the day these partnerships are what you're seeing all over campus."

Yet those corporate relationships and the nonstop fundraising trouble many UT professors, fans and alumni.

"All this marketing and globalization of big-time sports entertainment based at public universities has invaded and transformed the whole politeia of the university," said UT classics professor Thomas Palaima. "Students come to campus now not feeling awe at the prospect of learning and investigating truths about our world and ourselves but to get ready for game day and have a 'college experience' and then get a job."

Palaima said he had recently walked past the University Co-Op, a campus institution, and thought the storefront an apt metaphor for what critics believe are the school's misplaced priorities. "(It) was entirely given over to images of footballs and Longhorns souvenirs," he said. "Not a book in sight or any suggestion that there was a center of learning across the street."

The bulls-eye for much of that criticism would be sports marketing firms.

Virtually every major college athletics program outsources its sponsorships and lucrative media rights deals to two firms - IMG, which arguably has the most elite collegiate sports factories - and its longtime rival and occasional partner, Plano-based Learfield Sports, which represents about 100 colleges, including Texas A&M, Alabama and Oklahoma, plus many Drexels, Vermonts and Bucknells.

More competition

Though they often bid intensively for the same colleges, big-name sponsors and a slice of the $4.6 billion collegiate licensed merchandise market, IMG and Learfield have a joint partnership for online ticketing, and at four colleges - Alabama, Clemson, South Carolina and Miami - they jointly manage older, inherited contracts.

"The industry is still fairly collegial," said Tom Stultz, a former IMG executive who is now the president of a rising boutique firm, JMI Sports. "Some people have known each other over 30 years."

Lately, the Goliaths have gotten competition from both San Diego-based JMI, which signed basketball power Kentucky out from under IMG in 2014, and Atlanta's Fermata Partners, which signed Georgia, Oregon and Miami to licensing deals, then got bought out this year by another large IMG rival, CAA Sports.

The marketers usually try to distance themselves from what some of them dismiss as an academic debate.

They are simply the dealmakers, industry executives reason. They merely tap into what is already fanatical college sports devotion and team loyalty and then share the wealth with grateful, usually cash-strapped, colleges that often have to subsidize athletics.

At UT, when IMG's adjusted gross revenues surpass a certain threshold - ranging from $5 million to $15 million - the partners split their profits on a scale that increasingly benefits UT as more money is earned. This year, IMG took about 17 percent of what it raised for UT Athletics and paid the school a $2.26 million annual-rights fee.

Texas, which brought in $161 million for 2013-14 against $169 million in expenses, is one of only seven major public universities that did not require a subsidy for its athletic programs, according to NCAA figures. Ohio State, LSU, Oklahoma, Penn State, Nebraska and Purdue are the others.

Hundreds of colleges require subsidies from student fees or other sources, often as much as $10 million to $25 million, thus the need to have national marketers maximize a school's income, administrators say.

Despite running some $8 million in the red last year, the Texas athletics department says it continued to be one of the few programs in the country that returns money to the campus general fund.

Through what is described by the athletics department as an "informal" agreement with the UT president, Longhorns sports anticipates contributing about $6.7 million this year to the campus budget, including one-half of the annual Longhorn Network revenue and $1 million of the yearly gross from trademark licensing.

While this contribution has increased over the years, it is remarkably less than what's given by some other major athletic programs, such as Ohio State, which reports that its athletics department will transfer $35.7 million back to the campus this year.

Some faculty at UT would like to see all the athletics department revenue put into the general fund.

"There's a common misconception that the UT athletics department is an independent entity and can therefore keep what it earns and cannot be part of the overall university budget,"said Michael Granof, a distinguished UT accounting professor and former member of the school's Athletics Council. "There's nothing that says the president can't take money from the athletics department (and put it) into the general fund … so that athletic priorities have to be ranked with other campus priorities. We then could make rational decisions about what we spend on salaries for coaches."

Longtime partnership

IMG College took over the media rights for Longhorn sports in 2007 (radio play-by-play, coaches' shows and pay-per-view), stadium signage, corporate sponsorships, game-day programs and securing endorsement deals for coaches, among other duties. (That media rights deal expires in 2022; the sponsorship contract ends in 2016. IMG said it pays part of the salaries of some college coaches but none at Texas.)

Through 2021, those current, multiyear sponsorships with Chevrolet, Coca-Cola, Coors, H-E-B and some 17 others are expected to bring Texas at least $98 million. The Longhorn Network brings in another $12.5 million annually.

Patterson said he meets weekly with IMG's longtime general manager on the Longhorns account, Scott Willingham, who came to the job in the 1990s. "Scott and his IMG staff are like family over here," said UT Director of External Services and Women's Athletics Director Chris Plonsky. "Scott has this gift, this innate drive, to represent college athletics and make it his passion. We've built this relationship brick by brick with IMG, so there is very little that is not transparent."